Collections Lead Cost and Break-Even Math

For a collections practice, break-even is the cost of a lead plus any mail, divided by the share that become clients, compared with what a client is worth. A collections client may be worth more than a one-time matter if they file repeatedly. The figures below are examples, not benchmarks.

What is the formula?

Cost per signed client = (lead fee + mail cost per piece) / share of leads that sign.

A lead is $0.50, and we print and mail a postcard for $0.75 more ($1.25 a lead) or a letter for $1.25 more ($1.75 a lead).

What does an example look like?

Suppose, as an assumption only, that 1 in 80 leads becomes a client. At $1.25 a lead, that is $100 per signed client ($140 if you mail letters). Now compare it with what a client is worth. A one-time case might earn a single fee, while a repeat filer might send you a stream of cases. The same $120 can mean very different returns.

Why is lifetime value the key here?

Because repeat filers can file many cases. A client who sends ten cases is worth ten times a one-time plaintiff for the same acquisition cost. Track which clients keep sending work.

What should you track?

Leads received, pieces mailed, calls, signed clients, and how many matters each client sends. How to calculate cost per acquired client has the method.

What is a safe way to start?

Pick one county and one letter for a month. See how to qualify a collections lead, the collections page, and pricing.